V. -Public Works
Nothing is more natural than that a nation, after
having assured itself that an enterprise will benefit the community, should
have it executed by means of a general assessment. But I lose patience,
I confess, when I hear this economic blunder advanced in support of such
a project. “Besides, it will be a means of creating labour for the
workmen.”
The State opens a road, builds a palace, straightens a street, cuts
a canal; and so gives work to certain workmen -this is what is seen: but
it deprives certain other workmen of work, and this is what is not seen.
The road is begun. A thousand workmen come every morning, leave every
evening, and take their wages -this is certain. If the road had not been
decreed, if the supplies had not been voted, these good people would have
had neither work nor salary there; this also is certain.
But is this all? does not the operation, as a whole, contain something
else? At the moment when M. Dupin pronounces the emphatic words, “The
Assembly has adopted,” do the millions descend miraculously on a moon-beam
into the coffers of MM. Fould and Bineau? In order that the evolution may
be complete, as it is said, must not the State organise the receipts as
well as the expenditure? must it not set its taxgatherers and tax-payers
to work, the former to gather, and the latter to pay? Study the question,
now, in both its elements. While you state the destination given by the
State to the millions voted, do not neglect to state also the destination
which the taxpayer would have given, bat cannot now give, to the same.
Then you will understand that a public enterprise is a coin with two sides.
Upon one is engraved a labourer at work, with this device, that which is
seen; on the other is a labourer out of work, with the device, that which
is not seen.
The sophism which this work is intended to refute, is the more dangerous
when applied to public works, inasmuch as it serves to justify the most
wanton enterprises and extravagance. When a railroad or a bridge are of
real utility, it is sufficient to mention this utility. But if it does
not exist, what do they do? Recourse is had to this mystification: “We
must find work for the workmen.”
Accordingly, orders are given that the drains in the Champ-de-Mars be
made and unmade. The great Napoleon, it is said, thought he was doing a
very philanthropic work by causing ditches to be made and then filled up.
He said, therefore, “What signifies the result? All we want is to
see wealth spread among the labouring classes.”
But let us go to the root of the matter. We are deceived by money. To
demand the cooperation of all the citizens in a common work, in the form
of money, is in reality to demand a concurrence in kind; for every one
procures, by his own labour, the sum to which he is taxed. Now, if all
the citizens were to be called together, and made to execute, in conjunction,
a work useful to all, this would be easily understood; their reward would
be found in the results of the work itself.
But after having called them together, if you force them to make roads
which no one will pass through, palaces which no one will inhabit, and
this under the pretext of finding them work, it would be absurd, and they
would have a right to argue, “With this labour we have nothing to
do; we prefer working on our own account.”
A proceeding which consists in making the citizens cooperate in giving
money but not labour, does not, in any way, alter the general results.
The only thing is, that the loss would react upon all parties. By the former,
those whom the State employs, escape their part of the loss, by adding
it to that which their fellow-citizens have already suffered.
There is an article in our constitution which says: -“Society favours
and encourages the development of labour -by the establishment of public
works, by the State, the departments, and the parishes, as a means of employing
persons who are in want of work.”
As a temporary measure, on any emergency, during a hard winter, this
interference with the tax-payers may have its use. It acts in the same
way as securities. It adds nothing either to labour or to wages, but it
takes labour and wages from ordinary times to give them, at a loss it is
true, to times of difficulty.
As a permanent, general, systematic measure, it is nothing else than
a ruinous mystification, an impossibility, which shows a little excited
labour which is seen, and bides a great deal of prevented labour which
is not seen.
Society is the total of the forced or voluntary services which men perform
for each other; that is to say, of public services and private services.
The former, imposed and regulated by the law, which it is not always
easy to change, even when it is desirable, may survive with it their own
usefulness, and still preserve the name of public services, even when they
are no longer services at all, but rather public annoyances. The latter
belong to the sphere of the will, of individual responsibility. Every one
gives and receives what he wishes, and what he can, after a debate. They
have always the presumption of real utility, in exact proportion to their
comparative value.
This is the reason why the former description of services so often become
stationary, while the latter obey the law of progress.
While the exaggerated development of public services, by the waste of
strength which it involves, fastens upon society a fatal sycophancy, it
is a singular thing that several modern sects, attributing this character
to free and private services, are endeavouring to transform professions
into functions.
These sects violently oppose what they call intermediates. They would
gladly suppress the capitalist, the banker, the speculator, the projector,
the merchant, and the trader, accusing them of interposing between production
and consumption, to extort from both, without giving either anything in
return. Or rather, they would transfer to the State the work which they
accomplish, for this work cannot be suppressed.
The sophism of the Socialists on this point is showing to the public
what it pays to the intermediates in exchange for their services, and concealing
from it what is necessary to be paid to the State. Here is the usual conflict
between what is before our eyes, and what is perceptible to the mind only,
between what is seen, and what is not seen.
It was at the time of the scarcity, in 1847, that the Socialist schools
attempted and succeeded in popularizing their fatal theory. They knew very
well that the most absurd notions have always a chance with people who
are suffering; malisunda fames.
Therefore, by the help of the fine words, “trafficking in men by
men, speculation on hunger, monopoly,” they began to blacken commerce,
and to cast a veil over its benefits.
“What can be the use,” they say, “of leaving to the merchants
the care of importing food from the United States and the Crimea? Why do
not the State, the departments, and the towns, organize a service for provisions,
and a magazine for stores? They would sell at a return price, and the people,
poor things, would be exempted from the tribute which they pay to free,
that is, to egotistical, individual, and anarchical commerce.”
The tribute paid by the people to commerce, is that which is seen. The
tribute which the people would pay to the State, or to its agents, in the
Socialist system, is what is not seen.
In what does this pretended tribute, which the people pay to commerce,
consist? In this: that two men render each other a mutual service, in all
freedom, and under the pressure of competition and reduced prices.
When the hungry stomach is at Paris, and corn which can satisfy it is
at Odessa, the suffering cannot cease till the corn is brought into contact
with the stomach. There are three means by which this contact may be effected.
1st. The famished men may go themselves and fetch the corn. 2nd. They may
leave this task to those to whose trade it belongs. 3rd. They may club
together, and give the office in charge to public functionaries. Which
of these three methods possesses the greatest advantages? In every time,
in all countries, and the more free, enlightened, and experienced they
are, men have voluntarily chosen the second. I confess that this is sufficient,
in my opinion, to justify this choice. I cannot believe that mankind, as
a whole, is deceiving itself upon a point which touches it so nearly. But
let us consider the subject.
For thirty-six millions of citizens to go and fetch the corn they want
from Odessa, is a manifest impossibility. The first means, then, goes for
nothing. The consumers cannot act for themselves. They must, of necessity,
have recourse to intermediates, officials or agents.
But, observe, that the first of these three means would be the most
natural. In reality, the hungry man has to fetch his corn. It is a task
which concerns himself; a service due to himself. If another person, on
whatever ground, performs this service for him, takes the task upon himself,
this latter has a claim upon him for a compensation. I mean by this to
say that intermediates contain in themselves the principle of remuneration.
However that may be, since we must refer to what the Socialists call
a parasite, I would ask, which of the two is the most exacting parasite,
the merchant or the official?
Commerce (free, of course, otherwise I could not reason upon it), commerce,
I say, is led by its own interests to study the seasons, to give daily
statements of the state of the crops, to receive information from every
part of the globe, to foresee wants, to take precautions beforehand. It
has vessels always ready, correspondents everywhere; and it is its immediate
interest to buy at the lowest possible price, to economize in all the details
of its operations, and to attain the greatest results by the smallest efforts.
It is not the French merchants only who are occupied in procuring provisions
for France in time of need, and if their interest leads them irresistibly
to accomplish their task at the smallest possible cost, the competition
which they create amongst each other leads them no less irresistibly to
cause the consumers to partake of the profits of those realized savings.
The corn arrives; it is to the interest of commerce to sell it as soon
as possible, so as to avoid risks, to realize its funds, and begin again
the first opportunity.
Directed by the comparison of prices, it distributes food over the whole
surface of the country, beginning always at the highest price, that is,
where the demand is the greatest. It is impossible to imagine an organization
more completely calculated to meet the interest of those who are in want;
and the beauty of this organization, unperceived as it is by the Socialists,
results from the very fact that it is free. It is true, the consumer is
obliged to reimburse commerce for the expenses of conveyance, freight,
store-room, commission, &c.; but can any system be devised, in which
he who eats corn is not obliged to defray the expenses, whatever they may
be, of bringing it within his reach? The remuneration for the service performed
has to be paid also: but as regards its amount, this is reduced to the
small. est possible sum by competition; and as regards its justice, it
would be very strange if the artisans of Paris would not work for the artisans
of Marseilles, when the merchants of Marseilles work for the artisans of
Paris.
If, according to the Socialist invention, the State were to stand in
the stead of commerce, what would happen? I should like to be informed
where' the saving would be to the public? Would it be in the price of purchase?
Imagine the delegates of 40,000 parishes arriving at Odessa on a given
day, and on the day of need; imagine the effect upon prices. Would the
saving be in the expenses? Would fewer vessels be required, fewer sailors,
fewer transports, fewer sloops, or would you be exempt from the payment
of all these things? Would it be in the profits of the merchants? Would
your officials go to Odessa for nothing? Would they travel and work on
the principle of fraternity? Must they not live? must not they be paid
for their time? And do you believe that these expenses would not exceed
a thousand times the two or three per cent which the merchant gains, at
the rate at which he is ready to treat?
And then consider the difficulty of levying so many taxes, and of dividing
so much food. Think of the injustice, of the abuses inseparable for such
an enterprise. Think of the responsibility which would weigh upon the Government.
The Socialists who have invented these follies, and who, in the days
of distress, have introduced them into the minds of the masses, take to
themselves literally the title of advanced men; and it is not without some
danger that custom, that tyrant of tongues, authorizes the term, and the
sentiment which it involves. Advanced! This supposes that these gentlemen
can see further than the common people; that their only fault is, that
they are too much in advance of their age, and if the time is not yet come
for suppressing certain free services, pretended parasites, the fault is
to be attributed to the public, which is in the rear of socialism. I say,
from my soul and my conscience, the reverse is the truth; and I know not
to what barbarous age we should have to go back, if we would find the level
of Socialist knowledge on this subject. These modern sectarians incessantly
oppose association to actual society. They overlook the fact, that society,
under a free regulation, is a true association, far superior to any of
those which proceed from their fertile imaginations.
Let me illustrate this by an example. Before a man, when he gets up
in the morning, can put on a coat, ground must have been enclosed, broken
up, drained, tilled, and sown with a particular kind of plant; flocks must
have been fed, and have given their wool; this wool must have been spun,
woven, dyed, and converted into cloth; this cloth must have been cut, sewed,
and made into a garment. And this series of operations implies a number
of others; it supposes the employment of instruments for ploughing, &c.,
sheepfolds, sheds, coal, machines, carriages, &e.
If society were not a perfectly real association, a person who wanted
a coat would be reduced to the necessity of working in solitude; that is,
of performing for himself the innumerable parts of this series, from the
first stroke of the pickaxe to the last stitch which concludes the work.
But, thanks to the sociability which is the distinguishing character of
our race, these operations are distributed amongst a multitude of workers;
and they are further subdivided, for the common good, to an extent that,
as the consumption becomes more active, one single operation is able to
support a new trade.
Then comes the division of the profits, which operates according to
the contingent value which each has brought to the entire work. If this
is not association, I should like to know what is.
Observe, that as no one of these workers has obtained the smallest particle
of matter from nothingness, they are confined to performing for each other
mutual services, and to helping each other in a common object, and that
all may be considered, with respect to others, intermediates. If, for instance,
in the course of the operation, the conveyance becomes important enough
to occupy one person, the spinning another, the weaving another, why should
the first be considered a parasite more than the other two? The conveyance
must be made, must it not? Does not be who performs it devote to it his
time and trouble? and by so doing does he not spare that of his colleagues?
Do these do more or other than this for him? Are they not equally dependent
for remuneration, that is, for the division of the produce, upon the law
of reduced price? Is it not in all liberty, for the common good, that these
arrangements are entered into? What do we want with a Socialist then, who,
under pretence of organizing for us, comes despotically to break up our
voluntary arrangements, to check the division of labour, to substitute
isolated efforts for combined ones, and to send civilization back? Is association,
as I describe it here, in itself less association, because every one enters
and leaves it freely, chooses his place in it, judges and bargains for
himself on his own responsibility, and brings with him the spring and warrant
of personal interest? That it may deserve this name, is it necessary that
a pretended reformer should come and impose upon us his plan and his will,
and as it were, to concentrate mankind in himself?
The more we examine these advanced schools, the more do we become convinced
that there is but one thing at the root of them: ignorance proclaiming
itself infallible, and claiming despotism in the name of this infallibility.
I hope the reader will excuse this digression. It may not be altogether
useless, at a time when declamations, springing from St. Simonian, Phalansterian,
and Icarian books, are invoking the press and the tribune, and which seriously
threaten the liberty of labour and commercial transactions.
Yglesias thus conflates Austrian economic theory with libertarian political theory. In fairness, he is not alone in committing this error. Many libertarians do the same, which is unfortunate. Austrian economic theory describes how purposive action by fallible human beings unintentionally generates a grand, complex, and orderly market process. An additional ethical step is required to pronounce the market process good. Economic theory per se cannot recommend but only explain markets. This is what Ludwig von Mises meant when he insisted that Austrian economics is value-free. Anyone of any persuasion ought to be able to acknowledge that economic logic indicates that imposing a price ceiling on milk will, other things equal, create a shortage of milk. But that in itself is not an argument against the policy. Mises assumed the policymaker would have thought that result bad, but the economist qua economist cannot declare it such. As Israel Kirzner likes to say, the economist’s job in the policy realm is merely to point out that you cannot catch a northbound train from the southbound platform.
Gerald P. O’Driscoll and Mario Rizzo addressed this long ago in The Economics of Time and Ignorance:
